Africa opts for transport projects to grow trade

Africa opts for transport projects to grow trade

53
0

TRANSPORT projects are taking the bulk of investments in new infrastructure development across Africa as countries develop new trade routes, a new report by consulting firm Deloitte shows.

The report, Africa Construction Trends Report 2017, released in Nairobi on February 6, said the number of projects valuing over $50 million increased by 5.9 percent compared to 2016, an indication of growing infrastructure investments across Africa.

‘The reason why transport projects are more than others and of high value is because countries want to increase connectivity within and across the borders,’ said J.P Labuschagne, head of Infrastructure and Capital Projects Advisory in Deloitte.

He said African countries are making a change from the colonial legacy whose structure was to develop roads and railway for purposes of exporting raw materials to Europe.

‘African countries now want to build transport capacity which enables them to trade more within and across the borders,’ Labuschagne said.

‘This is helping to boast regional trade and making it easier to do business in Africa,’ said Labuschagne.

Continuous development of roads, railways and ports is partly attributed to the growth of trade within the Common Market for Eastern and Southern Africa (COMESA) from 1.5 billion dollars in 2000 to about $10bn in 2016, it said.

But COMESA trade ministers meeting in Uganda last year noted that high transport costs remain one of the biggest hindrance to the intra-region trade and agreed to develop a shipping line to serve members, including the land-locked ones.

The Deloitte report finds that China is the biggest funder of the transport projects among Africa’s development partners.

Chinese firms built the standard gauge railway in Kenya and the Ethiopia-Djibouti railway, and is set to develop Uganda’s railway, according to the report.

The report reveals that countries like Ethiopia are using about 40 percent of their gross domestic product (GDP) to finance infrastructure projects while others like Kenya are using 20 percent, in a show of intensity of project development across Africa.

The big spenders across the continent are the governments, owning 57 percent to 90 percent of the projects depending on the strength of the private sector, said the report.

LEAVE A REPLY